The purpose of the present paper is to examine the revenue efficiency of the Malaysian Islamic banking sector. The study also seeks to investigate the potential internal (bank specific) and external (macroeconomic) determinants that influence the revenue efficiency of Malaysian domestic Islamic banks. We employ the whole gamut of domestic and foreign Islamic banks operating in the Malaysian Islamic banking sector during the period of 2006 - 2015. The level of revenue efficiency is computed by using the Data Envelopment Analysis (DEA) method. Furthermore, we employ a panel regression analysis framework based on the Ordinary Least Square (OLS) method to examine the potential determinants of revenue efficiency. The results indicate that the level of revenue efficiency of Malaysian domestic Islamic banks is lower compared to their foreign Islamic bank counterparts. We find that bank market power, liquidity, and management quality significantly influence the improvement in revenue efficiency of the Malaysian domestic Islamic banks during the period under study. This study provides for the first time empirical evidence that covering all three efficiency concepts, namely cost, revenue, and profit efficiency is completely missing from the literature. By calculating these efficiency concepts, we can observe the efficiency levels of the domestic and foreign Islamic banks. In addition, by comparing both cost and profit efficiency, we can identify the influence of the revenue efficiency on the banks' profitability.

The current study looks at the impact of compliance to Shari'ah principles on the capital structure for Malaysian firms. Examination of impact of compliance is based on the classification by the Securities Commission of Malaysia. Given that the literature on adjustment tends to ignore non-linear models, the current study utilises Generalised Regression Neural Network (GRNNs). Results are compared to conventional panel data regression models via performing a hold-out sample. Initial results confirm stability of the data allowing predictive ability. The results indicate that compliant firms tend to finance a greater portion of their financing imbalance via equities relative to non-compliant firms. This provides a strong indication towards compliant firms reducing overall risk taking where the financing pattern incorporates a greater aspect of risk sharing which is in-line with Shari'ah principles. In addition, two more factors are ranked as important in deciding compliant firms issue choice to resolve financial imbalance: profitability and size. The rest of the determinants have low impact on explaining net debt issues. Diagnostics for results provide evidence of lower RMSE and MSE for GRNNs for the training, testing and overall datasets. The potential benefit of this research allows managers and investors of Islamic capital markets to understand potential risk exposure and financing costs of compliant firms. Findings also provide a roadmap for development of a sustainable capital market model which has wider implications on a global scale. � 2020-IOS Press and the authors.

This study attempts to discover the impact of the limitation of a country’s governance on Islamic and conventional bank revenue efficiency by using data from the countries of three regions. Non-parametric Data Envelopment Analysis (DEA) employed to measure the bank revenue efficiency level. The applied method of estimation consists of pooled Ordinary Least Square (OLS), Fixed Effect Model (FEM), Random Effect Model (REM), and the Generalized Method of Moments (GMM) to examine the impact of country governance and other potential determinants on bank efficiency. This study finds out that the dimensions of voice and accountability positively influenced Islamic and conventional bank revenue efficiency, however, the political stability and absence of violence and control of corruption provided the negative relationship. Furthermore, other dimensions of regulatory quality, government effectiveness and rule of law significantly negative with the conventional bank revenue efficiency. Implications from the study allow the related parties to identify the significant dimensions of a country’s governance to the efficiency of the banks to ensure better bank performance.

This paper investigates the speed of adjustment to target debt maturity for a sample of Malaysian firms based on the sample period of 2007 to 2016. We examine the impact of Sharia compliance on the speed of adjustment to target debt maturity structure by grouping companies based on nature of compliance to Sharia requirements which is categorised by the Securities Commission of Malaysia. In line with our expectations, the analysis shows that firms classified as Sharia compliant tend to adjust at more rapid rates to target debt maturity when below target levels suggesting that compliant firms are able to issue long-term debt at cheaper levels relative to non-compliant counterparts. In addition, the reverse is observed when evaluating firms above target levels where non-compliant firms adjust at more rapid rates. Our findings indicate that compliant firms are able to raise long-term debt at cheaper rates relative to non-compliant firms given the captive market situation observed in the Islamic capital markets in Malaysia. This does however indicate the potential for higher agency costs as well as greater levels of information asymmetry for compliant firms relative to non-compliant firms given that non-compliant firms are more willing to reduce maturity structures to reach target levels when above target levels. � 2018 International Strategic Management Association. All rights reserved.

This research investigate the impact of six dimensions of country governance to the price efficiency of Islamic and conventional banks. The empirical analysis is focused on the Islamic and conventional banks operating in the Bahrain, UAE, Kuwait, Oman, Qatar and Saudi Arabia countries. The data envelopment analysis (DEA) method applied to compute the revenue efficiency of Islamic and conventional banks. Then used the Multivariate Panel Regression Analysis with the Ordinary Least Square as an estimation method to investigate the potential determinants and the effect of country governance on the revenue efficiency. The empirical findings indicate that greater voice and accountability, political stability, regulatory quality, rule of law and control of corruption enhance the revenue efficiency of both Islamic and conventional banks. The dimension of government effectiveness exerts positive sign relationship with the banks revenue efficiency only on conventional banks. Copyright 200x Inderscience Enterprises Ltd.